British jobless claims fell by no less than 32.6K. They were expected to drop by 21.2K, in August after a drop of 29.2K in July (before revisions). The unemployment rate for July dropped to 7.7% for the first time in quite a while. It was expected to remain unchanged at 7.7%. These are excellent figures.
GBP/USD was advancing on high ground before the report, trading just under 1.5750 towards the event and leaping above this line to 1.5772 in the last minutes leading to the publication. The outcome was so good, that we didn’t have a “buy the rumor, sell the factâ€, but rather a wild extension of the gains, with cable breaking 1.58 and reaching a peak of 1.5825 before retreating to battle the 1.58 line.
EUR/GBP also felt the effect, and dropped below 0.84, with 0.8381 serving as the bottom so far. This is a break above 1.19 for GBP/EUR.
The average earnings index was expected to rise by 1.3% but rose by only 1.1%. This small disappointment was overshadowed by the main data.
The UK economy has shown quite a few positive signs of late. The return to solid growth in Q2 (0.7%) was followed by positive PMIs in Q3. Recent Claimant Count Change releases have also come better than expected. However, the unemployment rate didn’t fall.
Support appears at 1.5710, followed by 1.5650. Resistance is at 1.5820. For more, see the GBP/USD forecast.
